The new Help to Save account – get a 50% bonus on your savings

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The government is launching a new Help to Save account, which is designed to help people on a low income save money. If you qualify for the account, you’ll get 50p for every £1 you save. How will it work?

What is the Help to Save account?

The Help to Save account is aimed at people on a low income. It is designed to help them to save by giving them a top-up or bonus from the government. It works a bit like the Help to Buy ISA that’s already available for people who want to save for a deposit for their first home.

  • You can only get a Help to Save account if you receive certain benefits.
  • The most you can save in a Help to Save account is £2,400 over four years.
  • The maximum government bonus you’ll get is £1,200.
  • You can pay in between £1 and £50 a month.
  • You can apply for the account online via the Gov.uk website or by phone.
  • It’s an easy access account so you can take out money as and when you need it. If you take out money, it could affect the bonus you get.
  • The account will be provided by NS&I (National Savings & Investments), which means that 100% of the money you save is backed by the government.
  • You don’t earn any interest on the account, just the bonus.
  • If you stop receiving Working Tax Credit, Child Tax Credit or Universal Credit, you can keep your Help to Save account. You won’t be able to pay in any more money but you’ll still earn a government bonus on money you’ve saved so far.
  • After four years, money you have in your Help to Save account will be paid into your bank account.
  • The account is available from September 12th 2018 until September 30th 2023.

Who can get a Help to Save account?

You can get a Help to Save account if you qualify for certain benefits. These are:

  • Working Tax Credit
  • Child Tax Credit. You will qualify if you get what’s called a ‘nil award’ for Working Tax Credit but receive Child Tax Credit.
  • Universal Credit and received at least £548.88 in income as a household or individually during your last monthly assessment period. This works out at the equivalent of 16 hours a week of work at the National Living Wage.

SAVVY TIP: Money you get from Universal Credit doesn’t count towards your income.

Will Help to Save affect your benefits?

If you or you and your partner, if you live together, have more than £6,000 in savings, it could affect how much you get from Universal Credit. If you have less than this in your Help to Save account, it won’t affect the amount of Universal Credit you get.

SAVVY TIP: The government bonus of 50% of anything you’ve saved, isn’t included in this £6,000 limit.

Any money that you have in your Help to Save account won’t affect the amount of Working Tax Credit you’re entitled to.

The 50% bonus explained

You can save up to £50 a month and, if you save for two years, you’ll get a bonus worth 50p for every £ you’ve saved. If you save for another two years, you’ll get another bonus.

SAVVY TIP: In the first two years, the bonus you get will be 50% of the highest balance in that time. To use an example, this means that if you saved £400 over the first two years, but took out £100, you’d get a bonus of £200 – 50% of £400.

The second bonus,  which is paid at the end of the fourth year, is 50p in the £ for anything in your account above the highest balance you had in the first two years. So, using the earlier example, if you saved £400 in the first two years, but then took out £100 and saved an extra £300, you’d only get a bonus on anything you’d saved above £400 in years three and four, not on anything you’d saved above £300. That’s because your highest balance was £400.

If you don’t manage to save any extra in years three and four, you don’t qualify for a bonus.

I hope that’s explained it..!

SAVVY TIP: The bonuses are paid into your own bank account, not into the Help to Save account.

How to apply for a Help to Save account

You can apply online if you have a Government Gateway account. You can also use the HMRC app or apply by ringing 0300 322 7093. You’ll need to have details of your bank account.

You can save into a Help to Save account using a standing order (weekly, fortnightly or monthly). You can also make one-off payments with your debit card.

Will it get more women to save?

It should help some women. It’s only available to people who get Working Tax Credit, Universal Credit or Child Tax Credit. Government research shows that:

  • Two thirds of those claiming Working Tax Credit are women.
  • Most people claiming the benefit are working – almost 60% work for one employer.
  • Almost six out of ten had no savings and just under half had never saved.
  • 45,000 people have saved in a Help to Save account in the six months that it’s been running as a pilot scheme. They’ve saved an average of just over £66 each.

As a last thought, in case this policy seems rather familiar, it was due to be introduced in July 2010 having been piloted by the previous Labour government (it was then called ‘Gateway Savings’). However, the coalition government had an emergency budget in June 2010 – and scrapped plans for this scheme. The idea had been on the drawing board since 2001, and there was increased pressure on the government of the day to ‘do something’ after the Christmas hamper firm Farepak went bust.

Useful links: 

You can find out more about the Help to Save account and how to apply on the Gov.uk website.

Photo by Magda Ehlers from Pexels

Related articles: 

Ten things you need to know about the help to buy ISA

Working tax credits and child tax credits explained

10 things you need to know about universal credit

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